HYDERABAD: The Enforcement Directorate has taken Karvy MD C Parthasarathy into custody following his arrest three days ago. The Enforcement Directorate had filed a petition in city court seeking four-day custody of the Karvy Chairman and MD to dig out more details pertaining to the money laundering cases slammed against him.
The company’s Chief Financial officer G Krishna Hari was lodged in the Central Jail in Bengaluru. On January 20, the ED sought the custody of both Parthasarathy and Krishna Hari in the PMLA Special Court, Hyderabad. Following this, the ED was granted custody of the two from January 27 to January 30. After the medical examination protocol, the duo were moved to the ED office in Hyderabad.
A case under Prevention of Money Laundering Act was initiated against Parthasarathy after an FIR by HDFC Bank unearthed a complex web of Karvy Stock Broking Limited pledging the securities of clients without their knowledge with banks and NBFCs.
“The shares of clients who did not owe any funds to KSBL were also transferred to the margin/ pool Account of KSBL and were pledged with the banks/ NBFCs. The Power Of Attorney (POA) given by clients to KSBL to facilitate exchange settlements was grossly misused by KSBL at the directions of the CMD and senior executives,” an ED statement said.
“Further, it is found that KSBL availed loans from NBFCs to the tune of `400 crore in the name of five shell companies by pledging shares of clients of KSBL after illegally transferring these shares to their account,” it said.
These loans were then used to clear pending loans of related companies, conduct stock transactions. Some were even diverted to the Karvy CMD’s family concerns. The ED has also gathered relevant reports from Income Tax, RBI, SEBI and NSE against Karvy.